Search
Our continued focus on sustainability within the real estate sector is once again reflected in this article, where new research shows that sustainability certification has a significant impact on property valuation within the European logistics real estate sector.
A new market analysis from Cushman & Wakefield shows that logistics properties with high sustainability credentials are valued 19 to 24% higher than their non-certified counterparts. Specifically, properties in prime locations see a 19% price premium, while those outside prime locations experience a 24% increase in value. This trend shows the increased emphasis investors are placing on sustainability certifications, especially in less desirable and competitive areas (outside prime locations).
We further observe that sustainability credentials are not only reflected in property prices but are also influencing estimated rental values. Logistics companies are increasingly willing to pay higher rents for sustainable properties that align and support their own ESG objectives. Cushman & Wakefield’s report highlights this tendency, stating that sustainable properties can achieve estimated rental values that are 10 to 30% higher than those of non-sustainable assets.
In today’s lending landscape, sustainability has transitioned from an optional consideration to an essential requirement.
Lenders are increasingly prioritising sustainability in their financing decisions, treating it as a critical factor in their loan risk assessments. Properties that meet established environmental standards are considered lower-risk investments, increasing their appeal for financing. As a result, these properties are more likely to receive favorable lending terms, such as favourable rates and increased borrowing limits.
This shift has led to a significant decline of lenders willing to finance non-sustainable projects, reflecting the growing recognition and importance of sustainability across the financial sector.
While there is currently insufficient data to reliably predict the future performance of sustainable logistics properties – largely due to the newness of this sector – emerging market trends indicate a promising future. Logistics properties with sustainability credentials are expected to deliver significant financial and environmental returns over time, outperforming their non-certified counterparts.
The appeal of sustainable assets among investors is already apparent at the acquisition stage, where property valuations reflect price premiums associated with these credentials. This trend is driven by increasing awareness of the long-term financial benefits associated with sustainable properties, including increased tenant demand and higher estimated rental values. We only expect this trend to continue as a growing number of logistics companies actively seek environmentally responsible solutions that align with their sustainability goals, further increasing interest in certified logistics properties.
In a rapidly evolving real estate landscape, securing a competitive advantage by way of investing in sustainable assets becomes essential. As financial institutions are increasingly prioritising sustainability in their lending practices, investors stand to benefit from more favourable financing terms when investing in certified logistics properties.
As interest in sustainability certification within the logistics real estate sector is intensifying, Gorrissen Federspiel will follow this trend diligently.
Read the report from Cushman & Wakefield – Sustainable Logistics: Navigating Change in European Logistics Real Estate here